Skip To Content | Contact Us | About AASB | Links

AASB on Twitter AASB on LinkedIn




15 Aug. 2019

Proposal to Remove Special Purpose Financial Statements for Certain For-Profit Private Sector Entities (AASB ED 297) – Have your say!

The proposals will improve the consistency, comparability, transparency and enforceability of publicly lodged financial statements and better meet the needs of users that are accessing these publicly lodged financial statements. Directors will no longer be able to self-assess their reporting requirements.

Who else will be impacted? 

Other for-profit private sector entities that may be impacted include:

  1. co-operative and mutuals and others who are required by legislation to prepare financial statements that comply with either Australian Accounting Standards (AAS) or accounting standards (AS);
  2. trusts, partnerships and joint arrangements whose constituting document or another document requires the preparation of financial statements that comply with AAS IF the relevant document was created or amended on or after 1 July 2020; and
  3. others (both private and public sector) that elect to prepare general purpose financial statements (GPFS) and elect to apply the Conceptual Framework for Financial Reporting.

The proposals DO NOT apply to:

  1. small proprietary companies;
  2. trusts, partnerships and joint arrangements unless their constituting documents are created or amended after 1 July 2020;
  3. not-for-profit entities such as charities, companies limited by guarantee, incorporated associations and public sector entities as their financial reporting framework will be considered via separate targeted consultations; and
  4. for-profit public sector entities (unless they elect otherwise).

These entities may continue to prepare SPFS.

What is the proposed replacement for SPFS?  

The AASB proposes replacing the current Tier 2-Reduced Disclosure Requirements (RDR) with a revised Tier 2 framework that contains the same recognition and measurement (R&M) requirements, but a new simplified disclosure framework that would apply to all entities preparing Tier 2 general purpose financial statements (GPFS). The proposed disclosures are less than RDR so reduce the cost of the proposed transition from SPFS to GPFS and also benefit those already using RDR.Those entities preparing SPFS that comply with all R&M requirements in AAS and that are already consolidating subsidiaries and equity accounting associates and joint ventures will have an increase in disclosures only. As such only approximately 600 to 1,700 entities are expected to be impacted by increased R&M as well as increased disclosure requirements.  The AASB proposals will effectively mandate the R&M recommendations in ASIC Regulatory Guide 85 Reporting requirements for non-reporting entities.  

What transitional relief is proposed?

The AASB proposes relief from restating and presenting comparative information in the year of transition for entities preparing GPFS for the first time to facilitate a proposed effective date of 1 July 2020

Please have your say and submit your comments on ED 297 Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities, and ED 295 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for Profit Tier 2 Entities, to the AASB by 15 November 2019 via the AASB website, LinkedIn or email.